Profits will be maximized when the slope of the total revenue curve and the slope of the
total cost curve equal zero.
a. True
b. False
Figure 7-6
Which of the lines in Figure 7-6 represents a typical average fixed cost curve?
a. 1
b. 2
c. 3
d. 4
A monopoly firm
a. has a short-run supply curve that slopes upward.
b. is a price taker.
c. does not have a supply curve.
d. is at the mercy of the market-determined price.
Figure 10-4
Figure 10-4 shows the industry’s supply and demand curves in panel (1) and the cost
curves of a firm in the industry in panel (2). At S1, the firm is
a. preparing to shut down.
b. incurring losses.
c. earning zero economic profits.
d. earning economic profit greater than zero.
At higher interest rates, fewer people or firms will want to borrow. At lower interest
rates, fewer people or firms will want to save.
a. True
b. False
The price of gasoline has risen and the quantity sold has fallen. This was likely caused
by
a. a rise in the price of crude oil.
b. a seasonal rise in the demand for gasoline.
c. use of a new public transit system.
d. the discovery of crude oil in New Jersey.
Using only marginal revenue and marginal cost, we can determine whether a firm is
incurring a profit or a loss.
a. True
b. False
The short-run equilibrium output of a competitive firm is found by equating marginal
cost with price.
a. True
b. False
The basic forces driving the “invisible hand” are
a. government and business.
b. information and computer technology.
c. competition and self-interest.
d. cooperation and altruism.
Regulations are sometimes used to “correct” the failures of a market mechanism.
a. True
b. False
Direct controls are generally much more costly than emissions taxes because
a. under direct controls emissions cutbacks are usually not apportioned among the firms
on the basis of their ability to reduce pollution cheaply and efficiently.
b. emissions tax per unit of output is higher than the per-unit direct control program
cost.
c. government cannot legally levy emissions taxes that are as high.
d. firms disregard emissions taxes.
Which of the following is not a problem for the price system allocating resources
among different time periods?
a. Interest rates are used for a variety of purposes other than influencing investment.
b. The market devotes too much to immediate consumption.
c. Our market system leads to lesser real incomes for later generations.
d. Our market system despoils irreplaceable natural resources.
Fiscal federalism refers to
a. passing money from one level of government to another.
b. leaving indirect taxes to the states.
c. keeping property taxes low.
d. making all levels of government operate on a “pay as you go” basis.
In 2013, corporate profits were about ____ percent of national income.
a. 7,2
b. 14,0
c. 25,3
d. 44,1
Figure 14-1
In Figure 14-1, a change in consumer tastes favoring calculators will lead to which
movement?
a. A to C
b. A to D
c. A to B
d. A to E
A merger occurs when two previously independent firms are combined under a single
owner.
a. True
b. False